As we increasingly shift towards digital communication, many employers are exploring electronic delivery as a method for providing necessary employee benefits notices. However, it’s crucial to understand that there are specific rules regarding electronic vs. non-electronic (paper) delivery of these notices. This article will shed light on these different rules and provide some best practices for employers.
Non-Electronic Delivery
Non-electronic delivery is the traditional method of delivering employee benefits notices. Typically, this means handing the notices directly to employees or mailing them to the employees’ home addresses. The rule of thumb with non-electronic delivery is that the method used should be reasonably calculated to ensure actual receipt of the material.
When using non-electronic delivery, employers should:
- Confirm that the method chosen is likely to result in actual receipt of the notice.
- Keep records of the notices distributed and when they were sent.
Electronic Delivery
The Department of Labor (DOL) and the Internal Revenue Service (IRS) have specific rules regarding the electronic distribution of notices. Generally, employers can electronically deliver documents to employees who:
- Use electronic media as an integral part of their duties, or
- Consent to electronic delivery and are provided with specific information about the electronic delivery system.
In addition, the DOL issued a new safe harbor rule in 2020, expanding the use of electronic delivery for retirement plan disclosures. This rule introduces the “notice and access” method, where plan administrators can post participant disclosures on a website if they furnish a notice of internet availability (NOIA) to participants’ electronic addresses.
When using electronic delivery, employers should:
- Ensure they meet the requirements for electronic delivery under applicable law.
- Provide notices in a format that the employee can keep (downloadable, printable).
- If using the “notice and access” method, follow the specific rules regarding the NOIA.
Best Practices
Regardless of the delivery method chosen, it’s crucial to:
- Understand the rules: Make sure you know the specific rules applicable to the notice you are distributing and the method of distribution you are using.
- Document the process: Keep records of the notices sent and the method of delivery used. If using electronic delivery, keep records of consent from employees where necessary.
- Consult with a legal professional: Given the complexity of these rules and the potential penalties for non-compliance, it’s always a good idea to consult with a legal professional when implementing a delivery method for benefits notices.
Closing Thoughts
Whether you’re considering traditional non-electronic delivery or moving towards electronic delivery, it’s crucial to understand the rules and regulations that apply. By doing so, you can ensure you’re in compliance and providing your employees with the necessary and timely information about their benefits.
